ACY Securities

US Consumer Prices advanced in August to an annual 3.7%, stronger than economists expected at 3.6% and matching July’s 3.7%. On a monthly basis, US headline inflation rose to 0.3%, up from forecasts at 0.2%.

The US dollar continued its downward correction overnight before the CPI from US, causing the dollar index to dip after reaching an intra-day low of 105.56 yesterday.

At the beginning of the week, the USD/JPY pair-initiated trading at 149.52. The US dollar displayed early strength, thanks to the US Congress averting a government shutdown by passing a stopgap spending bill on the preceding Friday.

During the Asian trading session, the US dollar continued to display weakness, following a consistent decline in the dollar index over the past six days. In the previous session, the index marked its sixth consecutive day of lower closes and even reached an intraday low of 105.66.

Two-year US treasury yields plummeted to 4.96% (5.08%). Other global bond yields finished lower but to a lesser extent than those of the US. Germany’s 10-year JGB rate was at 2.77% (2.88%).

The global foreign exchange market experienced a degree of stabilization during the recent night, as market participants continued to absorb the recent escalation in geopolitical tensions within the Middle East.

The US dollar started the week on a strong note, aligning with other traditional safe-haven currencies like the Swiss franc and yen. Despite heightened geopolitical tensions in the Middle East over the weekend, the negative spillover effects on the foreign exchange market have been relatively limited so far.

The robust employment surge in September exceeded consensus expectations, but underlying weaknesses temper its significance for the Bank of Canada's upcoming rate decision.

The Dollar finished mixed against its Rivals while US bond yields climbed after the US economy created 336,000 jobs in September, beating forecasts at 171,000.

Palestinian militants launched an "unprecedented" infiltration attack against Israel on Saturday morning, the largest in years. They sent fighters from Gaza to the border, fired thousands of missiles, and killed dozens of Israelis.

A weaker than expected rise in the US September Private Employment data, the lowest in two years pulled the Dollar and bond yields lower. The benchmark US 10-year bond yield tumbled to 4.71% from 4.8% yesterday.

Bonds experienced another tumultuous trading session, yet this time around, yields headed in a downward direction. This shift was partly attributed to a less-than-ideal ADP payroll report (known for its unreliable predictive power), which acted as a deterrent against further selloffs.